Small businesses boosted by rebound lending

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  • businesses will be able to borrow between £ 2,000 and £ 50,000 and access the money within days
  • loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form

Small businesses will benefit from a new fast-start finance program offering loans with a 100% government-backed guarantee to lenders, the Chancellor announced today (Monday April 27).

Rishi Sunak said that the new Bounce Loan Program, which will provide loans of up to £ 50,000, would help strengthen the existing support package available for smaller businesses affected by the coronavirus pandemic.

The scheme was designed to ensure that small businesses that need vital cash injections to keep operating can secure financing within days, and is on top of the £ 6bn in business grants, supporting 4 millions of jobs thanks to the job retention program and generous tax deferrals supporting hundreds of thousands of businesses.

The government, which has consulted extensively with business representatives on the design of the new program, will provide lenders with a 100% guarantee for the loan and pay all fees and interest for the first 12 months. No refund will be due during the first 12 months.

The loans will be easy to apply with a short standardized online application. The loan is expected to reach businesses within days, providing immediate support to those in need as easily as possible.

The Chancellor of the Exchequer, Rishi Sunak, said:

Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan program will allow them to quickly obtain the financing they need to survive this crisis.

This is in addition to business grants, tax deferrals and the job retention program, which are already helping support hundreds of thousands of small businesses.

Business Secretary Alok Sharma said:

Our small businesses are essential to ensuring the prosperity of our communities and will be critical to creating jobs and ensuring economic growth as we recover.

This quick loan program provides additional protection so that small businesses across the country can immediately access the financing they need, as part of the unprecedented support program we have put in place.

The program will launch for apps on Monday, May 4. Businesses will be able to access these loans through a network of approved lenders.

The government will work with lenders to ensure that loans under this program are advanced as quickly as possible and agree to a low level of standardized interest for the remaining term of the loan.

Remarks

Our Covid-19 support programs have delivered more than £ 15 billion to businesses in just a few weeks. We have established :

  • our job retention program – over 500,000 claims have been lodged worth £ 4.5 billion
  • business grants – half a million commercial properties have benefited from £ 6 billion in business grants
  • the Coronavirus Business Interruption Loan Scheme – with over 20,000 loans
  • the Covid Corporate Financing Facility, which has provided more than £ 14 billion to large corporations
  • generous VAT deferrals worth several billion pounds
  • scrapped companies rate
  • cover the cost of statutory sickness benefits
  • The new program will operate alongside the Coronavirus Business Interruption Loan Program (CBILS) and the Large Business Interruption Loan Program (CLBILS) for the coronavirus.
  • We are also taking additional steps regarding the Coronavirus Business Interruption Loan Scheme (CBILS) to ensure lenders have the confidence they need to process funding requests quickly, including removing the per-lender portfolio limit for government guarantee and by modifying the viability tests which all banks will need to assess is whether a business was viable before COVID-19

Business reactions

Mike Cherry, National President of the Federation of Small Businesses, said:

This crucial new initiative is expected to provide thousands of small businesses with quick access to the working capital they need, helping to protect the millions of jobs they provide across the UK.

This breakthrough marks a new decisive intervention by the Treasury and the Business Line Management, relying on existing supports in an innovative way. Prompt delivery is now essential, and we also look forward to working with the government in the long term to strengthen competition in the market, including that provided by non-bank lenders.

We are delighted to see the Chancellor and the Business Secretary listening to the needs of small businesses, and we will continue to work with them to ensure that small businesses and the jobs they provide are protected throughout this period. public health challenge and that small businesses are at the forefront of leading the recovery.

Dame Carolyn Fairbairn, CEO of the CBI, said:

Chancellor’s New 100% Secured Small Business Loan Program is transformational. Independent traders, micro-businesses and entrepreneurs will now have a simple way to finance themselves quickly to stay afloat, without red tape or tedious checks.

Thousands of businesses could be saved by this lifeline. The banks must now continue their work in overdrive to obtain loans more quickly.

It’s good to see the Chancellor listening to business, proving that where the plans need to be adjusted, he will do the right thing. It will be vital to maintain this approach in the months to come. Every job saved today will ensure a faster recovery tomorrow.

Jonathan Geldart, Managing Director of IoD:

This is a welcome intervention, which should allow more companies to access the financing that could enable them to get through this crisis. Business leaders will appreciate the government’s continued flexibility to adapt its response to what is happening on the ground.

It is crucial that government support reaches those who need it. Having a quick and easy process will be vital, and we must remember that going into debt is always a difficult decision for small businesses.

Adam Marshall, CEO of BCC:

The Chancellor has shown that he is listening to the concerns of our business community and that he is taking action to get money to the front lines where it is needed.

This new path for our smaller businesses to apply quickly and get a quick decision will be crucial for those who have struggled to get a CBILS loan.

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